Austin Real Estate Blog

Austin leads the nation in economic growth due to the diversity of local and statewide businesses, the University of Texas, and overall good business climate.

A recent Brookings Institution report shows that Austin’s economy continued to grow in 2009 while other cities experienced slumps and downturns in their economies. The report finds that Austin grew more from 2008 through 2009 than any other major metropolitan area in the United States. While that growth was a mere two percent increase, it far outstripped the country’s overall metropolitan performance, which decreased by an average of 2.4 percent nationwide.

Austin’s economic growth was spurred mostly by consumer spending and professional and technical services, according to the report. While manufacturing and durable goods decreased, technology-based industries continued to thrive in the area. Austin’s economy has grown approximately 35 percent in the last decade, and the last census showed a 48 percent increase in population in this highly desirable metropolitan region. Austin’s location in Texas has helped it to maintain a healthy economy, but the Brookings Institution report indicates that Austin easily outperformed other major cities in Texas including San Antonio and Dallas.

One major area of growth that has kept Austin’s economy strong is the health care field. Major health care insurers, service providers, and manufacturing concerns have flocked to Austin in recent years, drawn in part by the highly-trained workforce and the business-friendly attitude of Austin’s city leadership. The increasing population of Austin requires large-scale health care service providers, and in recent years more than $1 billion in health care construction and investment has taken place in the Austin area. This provides jobs for area residents; in fact, in 2009 health care employment increased 5.5% overall in the Austin metropolitan area in contrast to a two percent increase nationwide.

Austin’s diverse employment base is also cited as a reason for its economic success. In addition to health care employers, the state government, educational institutions, and many other corporate interests provide jobs for residents. The resilient housing market in Austin is due in part to the stability of these employers, along with consistent population growth creating constant demand for properties in the Austin area. Austin consistently ranks in the top tier of American cities for quality of life and economic opportunity, which attracts many businesses and individuals to the area.

The Brookings Institution report ranked three Texas cities in the top five cities in terms of economic growth. The top five in order are: Austin; Washington, D.C.; McAllen, Texas; Virginia Beach, Virginia, and San Antonio, Texas.

You can view the interactive map on the Brookings Institution website. Below is a snap-shot of the overall economic growth situation.

Brooking Insitution Map of Economic Growth

What Did Interest Rates Do This Week?
** based on Freddie Mac weekly average survey **

30-yr Fixed – Lower
This Week:  4.78% (lowest since April 30, 2009)
Last Week:  4.83%
1yr Ago:  5.97%

15-yr Fixed – Slightly Lower
This Week:  4.29% (record low)
Last Week:  4.32%
1yr Ago:  5.74%

Jumbo Fixed (Average 30-yr Fixed)
Last Week:  5.75%Previous Week:  5.75%

Highlight of This Week’s Major Economic Reports

Despite the nation’s economic challenges, there’s a lot to be thankful for this year.  For one, the housing market has started to see stabilization – thanks in combination to historic low interest rates and increasing affordability.  Then, there’s the first-time buyer tax credit, which was set to expire on December 1^st and has since been extended to April 30^th.  The original expiration helped to prop up home sales in October, which saw the fastest sales pace since October 2007, with existing home sales jumping over 10% and new home sales spiking 6.2% from September’s figures.

What to Look for Next Week

The latest unemployment picture will be framed with the release of November’s employment report.  Even though unemployment claims have slowly dropped in recent weeks, it’s expected we’ll see a rise in the 10% unemployment rate through the end of the year.

Short-Term Rate Outlook
Relatively Unchanged

Stay Informed:  What’s in the News

“America’s Fastest Recovering Cities” – Austin #3 from Forbes.com

http://www.forbes.com/2009/11/19/cities-recovery-unemployment-lifestyle-real-estate-top-ten_print.html

“Texas’s Existing Home Sales Climb, Prices Inch Up” from Texas A&M Real Estate Center

A total of 19,347 existing single-family homes were sold in Texas last month, a 15 percent increase from October 2008, according to MLS data compiled by the Real Estate Center at Texas A&M University.

The median price rose 1 percent to $143,300 during the same period, and the state finished the month with a 6.9-month inventory of existing homes.

Here is how select Texas cities fared in October (data current as of Nov. 24, 2009):

“US Job Losses to Bottom out Next Quarter: NABE” from CNBC.com

Economists expect the joblessness that has weighed down the nation’s economic recovery will start to slowly abate in 2010, but they predict consumers will continue to keep a tight rein on spending, according to a new survey.

“Fed Remains Cautious on Strength of Recovery” from The New York Times

The Federal Reserve’s new economic forecast and minutes from a session earlier this month reveal that policymakers continue to fret over whether the economy is strong enough to hold up without government stimulus efforts, such as the temporary fiscal programs for the housing sector. Concern about the recovery comes as Fed officials begin debates on when to start raising interest rates, which have been held at virtually zero since last December, and on ending their program to purchase $1.25 trillion in mortgage-related securities. The real estate industry fears an increase in mortgage rates, but the Fed also wants to focus on reducing its holdings and bringing its balance sheet back to normal.

Marie Funston | Sr. Mortgage Advisor | (512) 750-7270
9442 N Capital of Texas Hwy., Suite 1-600
Austin, TX 78759
Fax:  (512) 343-1224
Marie@austinmortgageadvisor.com

Since 2008 there have been 5 major regional cities that have fared very well through this recession. Among the 5 Austin of course struck well. Brookings reviewed the gross metropolitan product output for San Antonio, Austin, Houston and Dallas in Texas, and Oklahoma City, Oklahoma. It is no surprise as these cities have grown in output since the recession. In Brookings’ most recent survey these cities experienced a decline in the first quart of 2009. Austin less than 1% decline of .06% between the fourth quarter of 2008 and the first of 2009.

This study was conducted by the Brookings Institute in Washington, DC, as part of their MetroMonitor program. This institute conducts a variety of studies to narrow down where cities are faring through the recession. They review employment vs unemployment rates, wages and housing costs.

Austin, as usual, fared well through the process. Austin’s average wage increased during the same period of time, as much as 1.4 percent. Housing costs are also increasing in the Austin Metro Area. There was a minor decrease in job opportunities over the reviewed time, .05%.

This is only one of several studies to produce a clear picture of how well the Austin metropolitan area is increasing, improving and developing even through a recession that has brought most of the country down.

There are many major cities across the United States. With 2008’s turbulent job market, only one major metropolitan area had an increase in the job market. That city was home, Austin, Texas. According to the Bureau of Labor this is the third month that Austin has out preformed all of the United States cities involved in the survey. Each one of these are involved due to the size of their labor force; it is more than 750 thousand potentially employed adults. The results of this continued gain is seen in the unemployment rate of 5.8 percent when the national average is 9.4 percent.

The big job increases for 2009 have been in the areas of Hospitality, Retail, and Restaurants. These services are provided direct to the public and even through a recession they are seeing modest growth opportunities. Direct impact on Austin’s job market, goods producing industries and technology based industries are down across the region. The jobs in the direct to consumer industries mentioned above, compensate significantly for those jobs lost.

Within the Texas borders Austin’s 5.8% unemployment rate ranks at the top of the list. Dallas-Fort Worth stands with 6.6% and Huston at 6.3% unemployment rates for April. The only Texas City with a better unemployment rate was San Antonio at 5.4%. Many of the smaller metro areas reported more than 8% unemployment.

The new Mayor of Austin will be facing some serious issues when elected. David Buttross feels that he can handle the job. As a graduate of both a local high school and the University of Texas, Buttross has made Austin his home for many years. He received his real estate license in 1988 and became an entrepreneur a couple of years later. He has helped over 1,000 residents become homeowners and has managed up to 400 units at one time. Buttross believes that his business background will help to ensure Austin’s future as Mayor. He has been budgeting and investing for over twenty years and wants to bring that knowledge to the city of Austin.

There are several issues that all Austinites are concerned with. First and foremost is the city budget. In such economic times, the city needs someone with a solid plan to reduce spending. Buttross states that he plans to eliminate wasteful spending if elected, “making the necessary cuts and ensuring that Austin lives within its revenue.” This would include the reduction of funding for lobbyists. Also on his to do list is the updating of the local transit system at a reasonable price. Roads, parks, and sidewalks to help give Austinites a safer and more enjoyable city is also a top priority for Buttross.

It is important to learn about each candidate to help you decide who will be best for Austin in such a difficult time. Early voting begins on April 27th. Election Day is Saturday, May 9th. Learn more about David Buttross at his website www.davidbuttross.com.

Like every city in the nation these days, Austin is facing some difficult choices. Amidst economic worries and budget concerns, Austinites are faced with the task of electing a new Mayor. Lee Leffingwell, a current City Council Member, has placed his name into the race.

Leffingwell in an Austin native, graduate of the University of Texas, and a retired Navy pilot with over twenty years of service. Through his service, he has “learned what it means to be an honorable, hard working, accountable leader.” As a member of the City Council, Leffingwell has fought for better infrastructure and public transportation, environmental issues, and public safety.

Leffingwell has several innovative ideas to help Austin through a most difficult time. If elected, he plans to form a committee made of leaders that represent everyone in Austin as an advisory panel. He also plans to focus on the development of green collar job training strategy. Leffingwell is opposed to cutting back on health or safety issues, wanting to maintain the current levels of safety and social services and expanding mental health services when able. He is also recommended a more open government, including posting all of the city’s finances and issues online and allowing residents to comment.

Leffingwell is optimistic about Austin’s future and wants to be on the front lines to help maintain its great living standards. Learn more about Lee Leffingwell at his website www.austinleadership.com. Remember, early voting begins on April 27th, with Election Day on May 9th.

Like many cities in the nation, Austin is facing some serious issues that need to be handled by a new Mayor beginning in May. There are several candidates to choose from this election, including two that currently sit on the Austin City Council. McCracken has been an intense supporter of Austin’s ever growing technology sector. He chairs the council’s Emerging Technologies Committee and the Land Use-Transportation Committee. A Corpus Christi native and graduate of Princeton and the University of Texas School of Law, McCracken has served as a prosecutor for Harris County in Texas. McCracken has also been a staunch supporter of all things green in Austin, helping to make Austin Energy the first utility nationwide to open its grid for clean energy companies to test their technologies.

The major issues faced by Austinites during this election include the city’s budget, transportation and infrastructure, and the environment. McCracken’s way to a better economy entails the embrace of emerging technologies within clean energy, biotech, film and digital media. McCracken hopes to commit to puting solar power onto 100,000 homes in the next ten years, again by investing in emerging technologies. He plans to create an endowment to ensure that Austinites have every opportunity to learn green collar jobs and healthcare professions, citing “we want everyone to be included…including the less fortunate.”

With so many issues facing the candidates, it is important to know where each one stands on the matters that are important to Austin. Remember, early voting begins April 27th, with Election Day on Saturday, May 9th. For more information about Brewster McCracken, visit his website www.brewstermccracken.com

The state of Texas has a much better unemployment rate than the nation does at this moment. Several strong city economies have helped to keep Texas below the 7% unemployment rate thus far. Austin, for example, has an unemployment rate of less than 4%, and has actually managed to create jobs despite our stumbling economy. There are areas in Texas, however, that have not been spared the drag of the current recession. The Rio Grande Valley, which borders Mexico, has a current unemployment rate of 9.5%. The Labor Workforce Commission released a report recently that stated 1 in 10 residents of this area were out of work in the month of March.

There are several reasons why this part of Texas has been hit so hard when compared with the rest of the state. First off, its proximity to Mexico means that it is more affected by the decline in value of the peso. Also, there are many migrant workers who make residence here, but travel to harvest crops. They will then return home and remain unemployed while living off of what they have earned elsewhere. It is also believed that many residents do travel out of state for other employment, such as factory work, which has been hit hard by the economy. When they are laid off, residents return home to an equally sparse job market.

The most recent report has the state of Texas’ unemployment rate at 6.7%. The national rate as of now is 9%. At the moment, it is anyone’s guess as to when the recession will begin to turn. Most experts believe that 2009 will see more of the same as we did in January and February. While Texas may hang on better as a state, there will still be areas in need of help to recover.

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From Green Building Talk

Getting Into Hot Water: Solar Water Heating Pays For Itself Five Times Over
An analysis of the engineering and economics for a solar water-heating system shows it to have a payback period of just two years, according to researchers in India. They report, in the International Journal of Global Energy Issues, on the success of the 1000-liter system operating at a university hostel.

The current focus in the developed world is on advanced technological approaches to alternative energy sources, such as photovoltaic cells for solar power and harnessing wind and wave with elaborate systems to generate electricity. However, the cost of such systems may be prohibitive for some applications in the developing world. They also often ignore the fact that a mundane process such as heating water might best be carried out using direct heat from the sun rather than including a waste energy-conversion step.

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Read the rest at GreenBuildingTalk.com

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From Associated Construction Publications

Construction Jobs Decrease by 104,000 in February

Construction employment fell by 104,000 in February with losses throughout the sector. This industry has shed 904,000 jobs since the recession began, with about half of the decline occurring in the past 4 months, according to testimony by Keith Hall, commissioner, Bureau of Labor Statistics, before the Joint Congressional Economic Committee today.

Although the stimulus package is expected to positively affect construction employment through “shovel-ready” projects, none of that has started yet.

The decline in construction employment mirrors declines in the rest of the labor market as the sharp and widespread contraction continued in February.

Nonfarm payroll employment fell by 651,000, following declines of 681,000 in December and 655,000 in January. Since the recession began in December 2007, job losses have totaled 4.4 million, well more than half of which occurred in the past 4 months. In February, the unemployment rate climbed from 7.6 to 8.1 percent, the highest rate in over 25 years.

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Read the rest at Associated Construction Publications

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The United States has been gripped in an economic downfall for years. The first and most dramatic show of the dwindling economy has been the national real estate market. Home foreclosures have risen so dramatically that the Federal government has had to bailout several financial institutions and in the process of creating a new plan to help save homes. The national job market has equally been affected by economic woes, making it even more difficult for many people to even consider buying a home. For all of the hardships that we are currently coping with, it appears that opportunity is knocking for foreign investors.

Homes in many of the nation’s hardest hit areas are being sold for taxes due. This has encouraged many foreign buyers, as far away as Australia, to purchase several homes in the U.S. as investment opportunities. Homes have been listed for as low as $1. Australian vacuum cleaner manufacturer Theo Szinger has already purchased several homes in the Detroit, Michigan area for less than $5,000. There are many houses available now for mere thousands of dollars that less than two years ago had been valued at more than $200,000. Many of these homes are in excellent condition; the current owners are just unable to keep up with payments.

As Americans continue to struggle to keep their homes, foreign parties are expected to continue to take advantage of the deals now offered throughout the nation. Homes are now available for less than the price of a used car. These homes have become a good source of income for buyers.